Aims: The aim of this study was to investigate the bacterial diversity associated with the sponge Craniella australiensis using a molecular strategy and isolating Actinomycetes with antimicrobial potentials. Methods and Results: The bacterial diversity associated with South China Sea sponge C. austrialiensis was assessed using a 16S rDNA clone library alongside restriction fragment length polymorphism and phylogenetic analysis. It was found that the C. austrialiensis-associated bacterial community consisted of alpha, beta and gamma-Proteobacteria, Firmicutes, Bacteroidetes as well as Actinobacterium. Actinomycetes were isolated successfully using seawater medium with sponge extracts. According to the BLAST and phylogenetic analysis based on about 600-bp 16S rDNA sequences, 11 of the representative 23 isolates closely matched the Streptomyces sp. while the remaining 12 matched the Actinomycetales. Twenty Actinomycetes have antimicrobial potentials, of which 15 are found to possess broad-spectrum antimicrobial potentials. Conclusions: The sponge C. austrialiensis-associated bacterial community is very abundant including Proteobacteria, Firmicutes, Bacteroidetes and Actinobacterium while Actinomycetes is not predominant. Artificial seawater medium with sponge extracts is suitable for Actinomycetes isolation. Most of the isolated C. austrialiensis-associated Actinomycetes have a broad spectrum of antimicrobial activity. Significance and Impact of the Study: This study revealed the diversity of the bacterial community and the isolated Actinomycetes with antimicrobial potentials associated with sponge C. australiensis